Stakeholders see fiscal discipline, exemplary leadership as panacea to recession

Fiscal discipline, blockage of leakages and exemplary leadership, particularly by political office holders, among others, has been recommended as panacea to the imminent economic recession in Africa’s largest economy.

Specifically, some stakeholders say current leakages in governance typified by enjoyment of series of payments by way of pension to some retired Nigerians, currently holding public offices or those enjoying double gratuities amount to wastage of tax payers money.

They have also called for a clearly defined economic roadmap and fiscal policy measures to complement the current monetary policy measures by the Central Bank of Nigeria (CBN), so as to reduce the impact of the impending recession as well as strive for economic growth.

“Restoring an economy to the path of growth from recession is like a war. We need two main but simple weapons to achieve the goal. We need a clear roadmap or plan and a leadership that is ready to think, focused and ready to make sacrifice. For a secular state like ours, no matter where the pendulum of power is now, the leadership must be focused and balanced. The talents to manage every segment of our society are all over the country waiting to be mobilised,” according to Bolade Agbola, executive director, Cashcraft Asset Management Limited, in an email response to BusinessDay inquiry.

Nigeria expects to have negative GDP for the second consecutive quarters, by the time the half year figures are released with the attendant recession identified decline in crude oil to $46 per barrel, which is close to 70 percent below its peak price of $114 in June 2014, oil production 1.4 million barrels per day, which well below our OPEC 2.1mbl, Agbola said.

“It provides a unique opportunity for the government to articulate the strategies to get the economy growing again. The shrinkage of the economy was inevitable. Now is the time to restructure and diversify the economy. We need to focus on critical infrastructure like rail line, power and roads. We need to strengthen our agriculture to reduce our imports and boost our foreign exchange earnings. We need to embark on comprehensive import substitution strategy to reduce our dependence on foreign goods and services,” he said.

According to Friday Ameh, energy analyst, “It is unthinkable to hear about some governors thinking of foreign jamboree as well as still maintaining their retinue of personal staff and ostentatious living at a time that some Nigerians are finding it difficult to feed themselves and their families.”

Razia Khan, managing director, chief economist, Africa, Global Research, Standard Chartered Bank, called for complementary measures between fiscal and monetary policy, adding that the recent liberalisation of the foreign exchange by CBN should be seen as effort at engendering growth in the economy.

“The tightening measure was an important step in re-establishing the credibility of monetary policy in Nigeria,” Khan said.

According to Robert Omotunde, research department, Afrinvest, businesses are being affected by a decline in sales and profits, which has been largely triggered by a decline in real income and a slump in consumer spending. Companies have reacted by massively laying off in order to reduce operational expenses, and this has continued to pressure the unemployment rate.

“Many of these lingering issues however require fiscal policy responses than monetary policies. Although the significance of the recent effort of the government to salvage the economy may not translate into a sharp swing in the tide of things in the short term due to huge confidence deficit impeding the system, we anticipate the overall impact of recent policy actions to be positive for the economy in the medium to long term. We are quite positive about H2:2016 and beyond given the quantum of reforms that have been introduced over the last six months,” Omotunde said.

According to analysts at Ecobank, “It is however worrisome that the rising inflationary pressure was largely a reflection of structural factors, including high cost of electricity, high transport cost, high cost of inputs, low industrial activities as well as higher prices of both domestic and imported food products.”